FinCEN includes crypto in alert on Russia potentially evading sanctions

FinCEN includes crypto in alert on Russia potentially evading sanctions

The United States Financial Crimes Enforcement Network (or FinCEN), a bureau of Treasury Department, has warned financial institutions that crypto could be used by Russia to avoid sanctions related to its military action in Ukraine.

FinCEN issued a Monday alert reminding U.S.-based financial organizations “with visibility into cryptocurrency” or convertible virtual currency (or CVC) to report any activity that might be considered as a way for Russia to avoid sanctions imposed by the U.S. The U.S. watchdog stated that CVCs could be used by the Russian government to evade large-scale sanctions, but financial institutions were required to report any activity from Russian or Belarusian individuals. These actions have been referred to as “economic warfare.”

Him Das, who is the FinCEN acting chief director since August 2021, stated that Russia’s economic pressure is increasing and it is crucial for U.S. financial institutions not to ignore potential Russian sanctions evasion by state actors or oligarchs. Although we have not witnessed widespread evasion using methods like cryptocurrency, prompt reporting is crucial to our national security as well as our efforts to support Ukraine’s people.

Numerous U.S. agencies and lawmakers have voiced concern about Russian-based banks and individuals who might use crypto to avoid the sanctions announced on February 24th by President Joe Biden. On February 28, the Office of Foreign Assets Control, the Treasury Department agency that administers and enforces U.S. sanctions, warned Americans not to use crypto currencies to benefit Russia’s central bank or government. According to OFAC, crypto transactions were considered “deceptive or structured transactions” or deals.

Coinbase proposes Crypto Tech to Promote Global Sanction Compliance

U.S. lawmakers and EU legislators have been raising concerns about Russia’s potential use of crypto assets, as Russia’s options shrink due to its inability to access SWIFT payments network or the major banks that are on the sanctions list. Bloomberg reported Monday that President Biden will sign an executive ordering establishing a comprehensive regulatory framework for cryptocurrencies in response to the increasing military situation in Ukraine.

Although there have been many ups and downs in the crypto EO, this week’s timeline is definite. CNBC’s @kaylatausche also confirmed our reporting. https://t.co/6uFj8HFSjH
— Jennifer Epstein (@jeneps) March 7, 2022

Minister of digital transformation in Ukraine Mykhailo Fedorov has made a direct appeal to crypto exchanges via social media to block Russian addresses. Many exchanges, including Binance and Kraken, have stated that they won’t unilaterally block Russian users from accessing their coins unless it is required by law.

I am asking all major crypto exchanges for their cooperation in blocking Russian addresses. It is crucial that you not only freeze addresses associated with Russian and Belarusian politicians but also ordinary users.
— Mykhailo Fedorov, @FedorovMykhailo February 27, 2022

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